Economic Impact of the Australian Bushfire: Consumption and Investment

This report examines the economic consequences of the Australian bushfires, focusing on their impact on consumption and investment. The report highlights a decline in consumer activity due to health concerns from the emitted gases and a shift in consumption patterns, with increased demand for protective items like facemasks. Retail sales, particularly in apparel, have decreased, and consumer confidence has fallen, potentially leading to a decrease in Australia's GDP growth. Furthermore, the report discusses the negative effects on investment, particularly in tourism and property, as unfavorable climate conditions and environmental concerns deter investors and residents. The agriculture sector also suffers from the extreme weather conditions, leading to reduced revenue for farmers. Overall, the report concludes that the bushfires have created a downturn in economic growth, affecting multiple sectors within the Australian economy.

Running head: ECONOMIC IMPACT OF BUSHFIRE ON AUSTRALIA
ECONOMIC IMPACT OF BUSHFIRE ON AUSTRALIA
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1ECONOMIC IMPACT OF BUSHFIRE ON AUSTRALIA
Australian Bushfire affecting consumption and investment
Australian bushfire has become a devastating factor for the entire economy. The huge
volume of gasses emitted from the bushfires has limited the consumption of the consumers.
Moreover, the activity of the consumers in the surrounding areas of the bushfire is
continuously declining. The reason behind this fall and shift of residents from the area is the
outbreak of the fire, which is affecting the health of the public. There is a shift in
consumption from retail commodities to facemasks and respirators. Major apparel retailers
complain about the fall in sales of clothes and other accessories because of the outbreak of
the fire. Department chain Harris Scarf announced the closure of its 40 percent shops due to
falling demand for its products (NewsComAu. 2020). Additionally, there is a continuous fall
in consumer's confidence that is leading to a fall in consumption expenditure. Several
economists anticipate a fall in the GDP growth of Australia between 0.25 percent to 1 percent
by the start of 2020 (Thediplomat.com. 2020).
Apart from a fall in retail demand and consumption, the investment in the country is
about to fall. This is because certain major sectors of Australia are experiencing a fall in
growth and revenue. This sectors includes tourism and property market. Tourism demand is
continuously falling because of the unfavourable climate and extreme levels of harmful
gasses in the atmosphere. In addition to this, there is a fall in construction near the bush fire
areas because residents are not interested in buying and living in nearby areas. Therefore, the
investors are not investing in property, as well as the tourism business of Australia
(Mozo.com.au. 2020). This fall in investor's interest in the business is continuously reducing
the growth of the business sector in Australia. The agriculture sector too is suffering from a
fall in productivity due to extreme weather conditions and hot climatic situations. As a result,
there is a drop in revenue of the farmers as well as a fall in the consumption of the residents

2ECONOMIC IMPACT OF BUSHFIRE ON AUSTRALIA
of the economy. Therefore, there is a fall in the GDP of the economy, which provides
evidence for the anticipated fall in economic growth.

3ECONOMIC IMPACT OF BUSHFIRE ON AUSTRALIA
References
Mozo.com.au. 2020. Bushfires expected to have major short-term impacts on property prices.
[online] Available at: https://mozo.com.au/home-loans/articles/bushfires-expected-to-have-
major-short-term-impacts-on-property-prices [Accessed 2 Feb. 2020].
NewsComAu. 2020. Aussie retail icon’s shock announcement. [online] Available at:
https://www.news.com.au/finance/economy/australian-economy/where-theres-smoke-aussie-
retail-icons-shock-announcement/news-story/f1ec897eb0ae05c4996c4a33d00bc709
[Accessed 2 Feb. 2020].
Thediplomat.com. 2020. Fensom, A. Up In Smoke: Australia’s Bushfires Darken Economic
Outlook. [online] Available at: https://thediplomat.com/2020/01/up-in-smoke-australias-
bushfires-darken-economic-outlook/ [Accessed 2 Feb. 2020].

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